Strong first half performance underpinned by successful covid-19 recovery strategy and solid demand across both business verticals

STRATEGIC INVESTMENTS ON TRACK AND PAVING THE WAY FOR ATTRACTIVE RETURNS

  • Progressive Covid-19 response strategy delivered a successful recovery
  • Covid-19-related supply chain disruptions well managed
  • Growth projects in both verticals progressing according to plan and budget
  • Successful negotiation of RCF refinancing and Preference Share funding extension
  • Positive outlook as growth investments ramp-up with the strategic review to be finalised end H2
  • Green manufacturing strategy in focus to enhance environmental stewardship

19 August 2021 – Metair, a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions, today announced a robust first half performance for the 2021 financial year owing to successful strategic execution and market recovery from the Covid-19 fallout.

Group revenue increased by 51% to R5.9 billion as operational activities recovered from the impact of the stringent lockdown measures in South Africa, Turkey and Europe in the first half of last year. Group operating profit rose to R545 million from an R18 million loss with the operating margin at 9.2%. The Group achieved EBITDA (including equity earnings but excluding impairments) of R701 million, up from R139 million in the prior comparative period and headline earnings per share of 170 cents, from a loss of 56 cents.

Riaz Haffejee, Metair’s CEO, commented: “Our teams have done an excellent job in executing our Covid-19 response strategy to ensure that our operations recovered to benefit from higher levels of demand, and that we continued to deliver on customer commitments by adapting effective strategies to manage the significant supply chain disruptions experienced during the period. Despite the dynamic and challenging conditions, I am pleased to report that our investment projects remained on track to support our future growth and value creation for stakeholders.”

The Automotive Components Vertical which is directly dependent on South African OEM production was positively impacted by model launches, facelifts and general market recovery, securing a U-shaped recovery. OEM production volumes increased by 54%, buoyed by higher export demand for locally produced vehicles, resulting in an 88% improvement in Group revenue contribution to R3.5 billion. Operating profit improved to R254 million from a R48 million loss. This was achieved despite manufacturing inefficiencies and premium logistics costs brought about by Covid-19-related supply chain disruptions globally, as well as strategic project costs for planned new model launches.

The Energy Storage Vertical achieved a 42% increase in automotive sales volumes to 3 961 000 units supported by continued strong local aftermarket, OEM and export demand experienced across regions. While Rombat and FNB delivered creditable results, the V-shaped recovery was largely driven by improved export volumes from Mutlu Akü which delivered an exceptional performance. The vertical contributed a 32% increase in revenue to R3.3 billion while operating profit rose from R74 million to R328 million.

Cash generated from operations improved by 24% to R273 million with net working capital utilisation higher at R458 million due to increased activity levels as well as management’s efforts to manage supply chain disruptions and availability of raw materials. Cash and cash equivalents ended the period at R1.1 billion. Net debt increased from R805 million to R1.2 billion, however net finance charges decreased 30% to R64 million due to a reduction in interest rates and lower average debt levels for the period. Unutilised and available finance facilities across the Group including foreign currency Rand equivalents totalled R2.4 billion at period end.

To support continued expansion, Metair has successfully negotiated the refinancing of R750 million in revolving credit facilities (“RCF”) maturing in August 2021 and a three-year extension to R840 million in Preference Shares funding maturing in December 2021.

“Cash preservation and liquidity management were carefully balanced during this intensive capital expansion phase and continue to be a key focus. With the successful refinancing and extension of our RCF and preference shares funding, we are in a strong financial position to ramp-up capital investment in the second half which together with increased project costs will have a short-term impact on our margins but deliver substantial longer-term benefits” commented Sjoerd Douwenga, Metair’s CFO.

A total of R1.6 billion in capital expenditure (“capex”) (including Hesto Harnesses) has been approved for the financial year in support of new project launches in Automotive Components and AGM technology in Energy Storage. R392 million was spent in the first half, predominantly on expansion as well as on maintenance and health and safety, improving the group’s competitive position and efficiency. For the second half, capex will be focused on new business expansion for the Automotive Components Vertical in facilities, tooling and machinery.

The Automotive Components Vertical will enter a year of preparation and implementation as new projects are finalised and commissioned. Some of Metair’s subsidiaries enter a pre-production and prototype manufacturing phase for greenfield projects which will result in a slight shift in the normal replacement cycle and increased project costs ahead of model launches.

Metair is supporting its customers in their efforts to catch back lost production due to the civil unrest and widespread looting experienced in parts of South Africa in July and is relieved to report that the disruption to its operations was short-lived, with no physical damage to Metair properties and minimal stock losses experienced at third party sites. The manufacturing base has been stabilised and Metair is optimistic about the prospects for full year SA OEM production to return to pre-Covid-19 levels and to beat 2019 levels in 2022, subject to supply chain stability and successful project launches. Mutlu Akü and Rombat achieved record first half volumes and Metair expects the second half performance form Energy Storage to remain strong supported by the colder northern hemisphere weather.

“Looking ahead, our priority is on supporting flawless new model launches and facelifts and on expanding our automotive battery product range while maintaining the momentum gained in operating activity during the first half. We will continue to drive effective project management and improve operating efficiencies to maintain our current base while investing in the Group’s future.

“We are encouraged by the recovery experienced across both verticals together with the growth opportunities ahead in the Automotive Components Vertical and look forward to refining our lithium-ion strategy for trading, assembly and manufacturing, as well as developing our strategic approach for the Energy Storage Vertical in the second half to secure the best outcome for stakeholders.

“As part of our sustainability strategy, we are investigating initiatives to enhance our environmental stewardship and secure the Group’s positioning in the future of green manufacturing. Our efforts are extended through the sponsorship of TWIMS’ Green Manufacturing chair in 2021, furthering South Africa’s executive expertise in this arena to actively combat climate change,“ concluded Haffejee.

ENQUIRIES

Instinctif Partners
Louise Fortuin + 27 (0)71 605 4294
Bandile Nkambule + 27 (0)82 815 1812

NOTES TO EDITORS

About Metair:

Metair Investments Ltd (Metair) is a publicly owned company listed on the Johannesburg Stock Exchange. The group is headquartered in Johannesburg and manages an international portfolio of companies that manufacture, distribute and retail products for its energy storage and automotive component verticals, exporting to approximately 46 countries.

The group’s operations manufacture, assemble, distribute and retail energy storage products and automotive components in Africa, Europe, Turkey, the Middle East and Russia.

Energy Storage

The energy storage segment manufactures batteries for automotive, telecoms, utility, mining, retail and materials/products handling sectors. Automotive batteries are mainly supplied to the aftermarket through Metair’s unique aftermarket distribution channels and franchised retail networks and are supplied to automotive original equipment manufacturers (OEMs).

Aftermarket products are also exported to approximately 46 destinations across Africa, Europe, the Middle East, Russia and Turkey. Non-automotive products are mainly sold into sub-Saharan Africa and Turkey.

Metair supplies batteries to all major OEMs in South Africa, Europe, Romania, Turkey and Russia through subsidiaries in Romania (Rombat), Turkey (Mutlu Akü) and South Africa (FNB). Key territories include Romania, Russia, South Africa, Turkey and Slovakia.

Automotive Components
Automotive components include original equipment (OE) components used in the assembly of new vehicles by OEMs as well as spare parts and other products used in the automotive aftermarket. These include brake pads, shock absorbers, lights, radiators and air conditioners. The group also produces generic aftermarket products for use in the increasing number of imported vehicles.

For more information on Metair and the group’s subsidiaries please visit the website at: www.metair.co.za

Mutlu Akü
LLB, Esq

Mr. Tolga Tulgar joined Metair in May 2014 as the General Counsel of Mutlu. He later transitioned to the roles of Corporate Governance Director and Strategy Development and Execution Director, simultaneously assuming the responsibility of General Counsel of the group's energy vertical. Mr. Tulgar stepped into the interim CEO role in 2020 during the COVID-19 pandemic and as of November 2023 become the CEO of Mutlu. He completed his LLB degree and his MBA is pending as of March 2025. Mr. Tulgar brings a wealth of experience in M&A, governance, management consulting, risk management/mitigation, and strategy, contributing to over a decade of expertise in his field.

First Battery
National diploma in Human Resources Management

Mr Bezuidenhout joined First Battery in February 1992 in the Human Resources department. In January 2001 he was appointed to the board as the Human Resources Director a role he fulfilled until 2011 when he took over as the Commercial Director of the business. In November 2013 he was appointed as the company MD and in 2018 as the CEO. With 32 years of service and having served on the company board in several roles for the past 23 years he has a broad depth of experience in the battery business.

Rombat
Company Management, Masters in Management of Business Development, MBA

Alin joined Rombat SA in 2021 as CEO & Vice-President of the Board of Directors. A leader with over 20 years’ experience in international business environment. Previously he had been Managing Director & Member of the Board in various international companies.

He held various executive positions in manufacturing and consultancy. He holds an E-MBA and two master’s degree in management. His passion for sustainable businesses, for circular economy, it made him get involved in various initiatives.

Unitrade
BCom, Management Development Programme

Mr Chinapen joined Unitrade 745 in December 2008 and held various roles within the organisation before being appointed as Director in March 2019 and Managing Director in September 2023. During his directorship, he has overseen major projects and a complete facility relocation. He completed his B Comm degree (UKZN) in 2010 and an MDP (UKZN) in 2018. He has more than 15 years' experience in the wire manufacturing industry.

Supreme Spring
Principles of Business Management, Toyota Executive Management Programme

Mr. Barley joined group in 1981 at National Spring and held various roles in the Technical and Sales Dept’s. When National Spring was incorporated into Supreme Spring in 1999 he became overall Sales Manager and was promoted to Sales Director in 2002. In 2015 he was promoted to Managing Director which is the position he still holds today.

Smiths Manufacturing
BCom (Hons), MBA 37 years’ experience in the automotive Industry

Selvin Konar holds the position of Managing Director for Smiths Manufacturing and Managing Director and Chairman of DENSO Sales South Africa, a Joint Venture company that Selvin was instrumental in forming with DENSO Corporation, Japan. Selvin commenced his career at Smiths Manufacturing in 1987 and has 37 years’ experience in the Automotive Industry having had exposure in both the OEM and Independent Aftermarket sectors.

He has spent time in Marketing, Business Planning, Costing and Purchasing, and served as Supply Chain Director before being appointed as Managing Director in 2014. Selvin obtained a Bachelor of Commerce (Hons) from the University of South Africa (Unisa) and an MBA from the University of KwaZulu-Natal (UKZN). Selvin is currently enrolled for the Doctoral programme at UKZN focussing on the Digital Transformation of Metair subsidiaries considering New Energy Vehicles.

Lumotech
IT Systems Architecture, MBA

Mr. du Plessis joined Lumotech in May 2011 as the ICT Manager. Demonstrating his commitment to professional development, he completed his MBA with honors (cum laude) in 2013. Between July 2013 and May 2016, he served as the Senior Manager for Logistics and ICT, managing these critical departments. In June 2016, he transitioned to a more focused role in manufacturing, assuming the position of General Manager for Manufacturing and ICT. In this capacity, he was responsible for overseeing Production, Logistics, and ICT functions. Recognized for his consistent performance, he was promoted to Director of Manufacturing and ICT in 2019 and later to Operations Director in 2021. After a decade of dedicated service at Lumotech, Mr. du Plessis was appointed Managing Director in June 2023, where he now leads the company's strategic direction and operations.

Automould
National Higher Diploma – Mechanical Engineering

Mr. Ally Joined Smiths Plastics/Automould in August 2004 as the Process & IE Manager. Was promoted to GM Eng in 2008, Technical Director in 2012 & appointed as MD in Oct 2021. Holds a National Higher Diploma in Mechanical Engineering & has 35 years in the Automotive Industry.

Alfred Teves Brake Systems
National Diplomas in Industrial Engineering and Production Management, Certificate in Management (Henley College UK)

Mr Ting Chong joined Alfred Teves Brake Systems Pty Ltd in April 2008 as Manager: Operations until July 2009. He then moved to Manager: Purchasing & Logistics until December 2010, and in January 2011 was promoted as General Manager (Directorship Appointment). In January 2015 he was appointed as Managing Director. He is a qualified Industrial Engineer and has more than 36 years of Manufacturing/Automotive experience.

Chief Operating Officer
BMW Management Development Programmes

Mr J Mouton has been appointed as the company's COO on a fixed term contract, with effect from 1 October 2023. Mr Mouton served as the technical and logistics director at the BMW Group plant in Rosslyn from 2018 to April 2023.

Mr Mouton has a wealth of experience, over 40 years, in the motor manufacturing and logistics industry gained through various leadership roles, including, inter alia, director of painted body and press plant at the BMW plant in Oxford and Swindon (UK), vice president of body and press plant at the BMW Tiexi Plant in mainland China and assembly general manager at the BMW South Africa Rosslyn plant.

Independent non-executive director
BAcc, Postgraduate Diploma in Accountancy, Certificate in Sustainability Leadership and Corporate Governance

Ms Medupe is a qualified Chartered Accountant (South Africa) and holds a Bachelor of Accountancy from the University of Durban Westville, a postgraduate diploma in Accountancy from the University of Kwa-Zulu Natal and a certificate in Sustainability Leadership and Corporate Governance from the London Business School.

Ms Medupe has over 29 years of professional experience, while her non-executive director experience is 15 years.

She serves on boards that include, Alexander Forbes Group Holdings Limited, City Lodge Hotels Limited and Exxaro Resources Limited. She also has experience chairing committees such as audit and risk, social and ethics and remuneration. Ms Medupe has served in numerous executive roles including her current role as chief executive officer of Indyebo Incorporated, chief operating officer of Nedbank Group Internal Audit, as well as Partner in other audit firms.

Ms Medupe has been appointed as an independent non-executive director of the Company and chairperson of the audit and risk committee with effect from 13 June 2023.

Chief Executive Officer
BCom, B. Acc, CA(SA)

Mr O’Flaherty is a qualified Chartered Accountant (SA) and began his career at PricewaterhouseCoopers Inc. in 1986, having served as an audit partner for 6 years in the Energy and Mining sector. Since 2001, he has served in both CFO and CEO roles in JSE listed companies (Group Five Limited and ArcelorMittal South Africa Limited), the public sector (Eskom Holdings Limited) and in large multinational private companies.

Mr O’Flaherty has a remarkable track record across multiple emerging markets coupled with in-depth experience in turnarounds, restructurings, mergers and acquisitions, and programme and project management. Prior to joining Ernst & Young Inc., he had the overall responsibility for the $1bn separation of ABSA Bank Limited from Barclays Plc.

Mr O’Flaherty is a commercially focused leader and has gained extensive experience across the manufacturing, mining, infrastructure, energy, trading, and financial services industries. He has also served as a non-executive director of JSE listed companies.

Company secretary
B Comm (Fin M) AIRMSA

Ms Vermaak joined the company in August 1998 and was appointed as company secretary in March 2001 and group finance manager in July 2003. From 1 April 2015, she shifted focus from finance and was appointed as group risk and compliance manager. She completed her B Comm Financial Management degree (cum laude) in 2005 on a part time basis and has more than 23 years’ experience in the listed company environment.

Ms Vermaak has been appointed as group risk and compliance executive from February 2023.

Chief financial officer
BCom Acc, PGDA, CA(SA)

Mr Jogia qualified as a Chartered Accountant in 2003 after completing his articles with Baker Tilley Morrison Murray. Thereafter he joined PwC’s consumer and industrial products division and gained extensive experience within listed and multinational companies. During his tenure at PwC, he served as the auditor in charge of the Metair audit and also spent 2 years in Birmingham, United Kingdom working on global industrial and automotive related companies.

Mr Jogia joined Metair as the group finance executive and member of subsidiary executive committees in 2013 during the Mutlu acquisition. He is primarily involved in operational and financial oversight of the group. Mr Jogia was appointed Chief Financial Officer and Executive Director of Metair on 31 May 2023.

Alternate director to N Mkhondo
BAcc (Hons), CA(SA), CA(Z) Programme for Leadership Development (Harvard Business School), Diploma in Banking (UJ)

Mr Sithole is the CEO and co-founder of Value Capital Partners Pty Limited (‘VCP’). Prior to starting VCP, he was at Brait for more than eight years as an executive director. Prior to Brait, Mr Sithole was a partner at Deloitte, where he spent six years as an audit partner and departed the firm as group leader for the Financial Services Audit Practice in Johannesburg. He currently also holds directorships, among others, in Sun International (Chairman of the Board) and Tiger Brands. Mr Sithole was appointed to the Metair board on 1 March 2019 and to the remuneration and nominations committees on 2 May 2019. On 3 August 2022, Mr Sithole resigned as an independent non-executive director of the Company and consequently stepped down as a member of the remuneration and nominations committee. Mr Sithole now serves as an alternate director to Ms Mkhondo, an independent non-executive director of the company.

Independent non-executive director
B Eng (Hons)

Mr Giliam holds a B.Eng (Hons) in Automotive, Project Management and a Bachelor in Mechanical Engineering from the University of Pretoria. Mr Giliam was previously the managing director of Robertson and Caine Proprietary Limited and has a wealth of experience in the automotive industry, gained through various senior roles, including, inter alia, project director at Jaguar Land Rover U.K, vice president at BMW Group and plant coordinator of Metalsa South Africa.

He was appointed as an independent non-executive director of Metair and a member of the investment committee with effect from 1 May 2021. Mr Giliam also serves as a member of the remuneration and nominations committee.

Independent non-executive director
BAcc, CA(SA), MBA

Ms Mkhondo is an investment director at Value Capital Partners Pty Limited (‘VCP’). Prior to joining VCP, Ms Mkhondo was a seasoned investment banking and corporate finance professional, having spent time at Goldman Sachs International Plc and Anglo-American Plc (both based in the United Kingdom) where she was responsible for mergers and acquisition execution, investment evaluation and strategic long-term financial planning. During her time at Goldman Sachs and Anglo American, Ms Mkhondo executed cross-border transactions in the consumer/retail, healthcare, real estate and metals and mining sectors across the United Kingdom, Africa and the Americas. Ms Mkhondo is a Chartered Accountant (SA) by profession, having begun her career in the audit and advisory financial institutions services team at Deloitte & Touche, in Johannesburg. In addition, Ms Mkhondo has a Master of Business Administration from the London Business School, where she was a Mo Ibrahim Scholar.

Ms Mkhondo was appointed as an independent non-executive director of the company and as a member of the investment committee on 28 June 2019. On 3 August 2022, she was appointed as a member of the remuneration committee. She currently serves as the chair of the remuneration and nominations committee.

She also serves as an independent non-executive director on the boards of PPC Limited.

Independent non-executive director
BCom Acc (Hons), CA(SA), MBA

Ms Sithebe is a private equity practitioner with extensive experience in mergers and acquisitions (‘M&A’) and corporate finance garnered from a wide range of businesses primarily in the industrials value chain. She began her career with EY where she trained to qualify as a CA(SA) after which she established an accounting and audit practice named Kamva Advisory & Associates Inc. between 2008 to 2011. Ms Sithebe later went on to join the Industrial Development Corporation of South Africa (IDC) where she was a Senior Dealmaker. Ms Sithebe later held the role of Principal at African Phoenix Investments Limited which was a JSE-Listed mid-market focused private equity investment firm. Ms Sithebe is currently Managing Director of Kamva Investments, an investment holding entity with a focus on unlisted investments and M&A advisory. Ms Sithebe also serves on the boards of Altron Limited and Dis-Chem Pharmacies Limited. Ms Sithebe holds a BCom Acc (RAU) with Honours (UNISA) and an MBA from GIBS.

Ms Sithebe was appointed as an independent non-executive director and a member of the audit and risk committee with effect from 1 January 2021 and to the social and ethics committee with effect from 29 January 2021.

Independent non-executive director
Diplom-Betriebswirt (BA)

Mr Muell holds a Diplom-Betriebswirt (BA) from Berufsakademie Stuttgart, Germany, equivalent to a Bachelor of Commerce. He has over 30 years of experience in the motor industry and is the co-founder and CEO of Scientrix Holdings Limited (Scientrix). Prior to Scientrix, Mr Muell was the President and CEO of Mercedes-Benz Argentina S.A and held various other executive positions within the Daimler Group in Germany, Turkey, South Africa, Mexico and Argentina. He has multinational and broad cross functional management experience in the fields of finance and controlling, logistics, procurement, strategic planning, sustainability and stakeholder management.

Mr Muell was appointed chairman of the social and ethics committee on 17 February 2020. He is also a member of the remuneration and nominations committee.

Lead independent non-executive director
BSc (Eng) Electrical, GCC, PMD, ADP

Mr Mawasha has been CEO of Kolobe Nala Investment Company (KNI) since April 2019. Prior to KNI, he was Country Head – South Africa for Rio Tinto and Managing Director of Richard Bay Minerals. He previously held leadership, operational and technical roles at Anglo American (Kumba Iron Ore), the De Beers Group and AngloGold Ashanti. Mr Mawasha is passionate about education and the development of others. He is a member of the Witwatersrand University Mining Advisory Council. In 2017, he was selected as a Young Global Leader of the World Economic Forum. Mr Mawasha was appointed to the Metair board and the audit and risk committee on 1 March 2018. On 2 May 2019, he was appointed as chairman of the investment committee. He was then appointed as the lead independent non-executive director on 15 February 2023.

He is a certified director with the Institute of directors of Southern Africa and a member of the South African Institute of Electrical Engineers.

Chair and Independent non-executive director
MA Clinical Psychology

Ms Mgoduso started her career as a clinical psychologist, during which time she lectured at universities and practiced both in South Africa and abroad. She served as group HR executive at Transnet SOC Ltd and then as Chief Executive Officer of Freight Dynamics. She later joined Imperial Logistics as Group Transformation Executive. She left Imperial Logistics to serve as Managing Director of Ayavuna Women’s Investments. After her time at Ayavuna, she spent time in strategic consulting and infrastructural development and HR. She is currently a Trustee of Ayavuna Trust, a board member at Zimplats, where she chairs the remuneration committee. She is the chairman of Jojose Investments. She chairs the remuneration committee at the Competition Commission.

Ms Mgoduso was appointed to the Metair board on 1 March 2016 and serves as member of the Remuneration and Nominations Committee. She was appointed as Chairperson of the Board on 16 February 2023.

Chairperson and independent nonexecutive Director
MA Clinical Psychology

Ms Mgoduso started her career as a clinical psychologist, during which time she lectured at universities and practiced both in South Africa and abroad. She served as group HR executive at Transnet SOC Ltd and then as chief executive officer of Freight Dynamics. She later joined Imperial Logistics as group transformation executive. She left Imperial Logistics to serve as managing director of Ayavuna Women’s Investments (Ayavuna). After her time at Ayavuna, she spent time in strategic consulting and infrastructural development. She is currently a Trustee of Ayavuna Trust, a board member at Zimplats, where she chairs the remuneration committee. She is also the chairperson of Jojose Investments. She chairs the remuneration committee at the Competition Commission. Ms Mgoduso was appointed to the Metair board on 1 March 2016 and served as chairperson of the remuneration committee. She was appointed to the nominations committee with effect from 27 September 2018 and was appointed as lead independent director with effect from 17 February 2020. As she was appointed as chairperson of the board (subject to shareholder confirmation at this AGM) and chairperson of the nominations committee on 15 February 2023, she has consequently stepped down as the lead independent non-executive director and as the chairperson of the remuneration committee (but shall remain a member of this committee).